publication
2026-02-05 14:15
The February meeting of the Governing Council of the European Central Bank did not bring any surprises. Interest rates remained unchanged at the lowest levels since fall 2022. Thanks to the decline in HICP inflation, the real interest rate in the Eurozone is above zero.
– The Governing Council decided today leave the three key ECB interest rates unchanged. Its current assessment once again confirms that inflation should stabilize at the target level of 2% in the medium term – we read in the February statement of the European Central Bank.
The deposit rate – which has been the key interest rate at the ECB for some time – remained unchanged at 2.00%. The rate of main refinancing operations was also not changed, which is 2.15%as well as the loan rate of 2.40%.
This was the fifth decision in a row to keep interest rates unchanged. The Governing Council delivered the same verdict in July, as well as in September, late October and December. That July decision was the first of its kind after eight cuts in a row as part of the monetary policy easing cycle that started in 2024.
– The economy remains resilient in a difficult global environment. Economic growth is supported by low unemployment, solid private sector balance sheets, gradual mobilization of public spending on defense and infrastructure, and the favorable impact of previous interest rate cuts. At the same time, the outlook remains uncertain, especially due to the current uncertainty surrounding global trade policy and existing geopolitical tensions, wrote the ECB Governing Council in a February statement.
The December decision of the Governing Council was not a surprise to economists and market participants. The former unanimously announced no changes in interest rates at the ECB.
According to PKO BP economists, this is how the ECB ended the cycle of interest rate cuts. – Therefore, we expect interest rates in the euro area to stabilize in 2026 – they added after the December announcement by the Governing Council.
This is how the ECB loosened its monetary policy
In June 2024, a decision was made to reduce interest rates in the euro zone for the first time since 2019. Previously, ECB rates were kept at the highest levels since 2001 for nine months. The total scale of these reductions amounted to 200 basis points. in the case of the deposit rate and 235 bps. in the case of the refinancing operation rate.
However, in 2025, the ECB completed the cycle of reductions in ECB credit costs in June. Previously, the ECB cut rates at its meetings in April, March and at the end of January. In mid-December last year, the Governing Council also reduced borrowing costs by 25 basis points. In October 2024, the ECB decided to cut rates by 25 basis points, and in September it also reduced the deposit rate by 25 basis points, while reducing the reference rate by as much as 60 basis points.
After all these cuts, the ECB's interest rates are very close to the annual dynamics of HICP inflation over the previous 12 months. Preliminary Eurostat data show that the harmonized index of consumer prices (HICP) in the euro area in January 2026 was 1.7% higher than a year earlier. In this way, HICP inflation itself was within the 2% target and the ECB's real interest rate (calculated ex post) became slightly positive.
– The Governing Council is committed to ensuring that inflation stabilizes at its target level of 2% over the medium term, said the ECB's management.
The ECB maintains “quantitative tightening” of monetary policy
In parallel to interest rate cuts, the ECB is pursuing a policy of “quantitative tightening” (QT) of monetary conditions. Under QT, the APP portfolio is reduced at a specific and predictable rate because the Eurosystem no longer reinvests capital repayments on maturing securities. As of July 2023, the Governing Council has stopped reinvestment under the APP program.
The APP and PEPP portfolios are being reduced at a specific and predictable pace as the Eurosystem is no longer reinvesting capital repayments on maturing securities, it said. The ECB stopped reinvestment under the PEPP program at the end of 2024.
The next decision-making meeting of the Governing Council is scheduled for March 18-19.
